Abstract

Agri-environmental schemes (AES) have had a limited effect on European agriculture due to farmers' reluctance to participate. Information on how farmers react when AES characteristics are modified can be an important input to the design of such policies. This article investigates farmers' preferences for different design options in a specific AES aimed at encouraging nitrogen fixing crops in marginal dry-land areas in Spain. We use a choice experiment survey conducted in two regions (Aragon and Andalusia). The analysis employs an error component random parameter logit model allowing for preference heterogeneity and correlation amongst the non-status quo alternatives. Farmers show a strong preference for maintaining their current management strategies; however, significant savings in cost or increased participation can be obtained by modifying some AES attributes. © 2010 The Authors. Journal compilation © 2010 The Agricultural Economics Society.